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Oil and gas markets rallied on Thursday as investors grappled with the shaky outlook for the two‑week Iran‑Israel ceasefire. Brent crude rose more than 2% to $96.77 a barrel, while New York light crude climbed nearly 3% to $97.23, still shy of the $100 threshold that many traders watch. The previous session had seen Brent plunge 13.29% to a four‑week low of $94.75. In the gas sector, the UK month‑ahead contract rebounded 1% to 115.35p per therm after a 15% drop the day before. European natural‑gas futures also recovered, edging toward €46/MWh from a five‑week trough of €45.30. The price uptick reflects growing scepticism about the durability of the ceasefire announced a day earlier by the United States and Iran, which included a pledge to reopen the Strait of Hormuz. UAE and Kuwait reported intercepting Iranian drones, and Iran’s parliamentary speaker accused the United States and Israel of breaching several agreement points. Iran’s Revolutionary Guards warned of a “regret‑inducing response” if Israeli strikes on Lebanon continue. The latest Israeli barrage killed at least 254 people and wounded 837, prompting the Fars news agency to note that oil‑tanker traffic through the strait had been halted. Former President Donald Trump used his Truth Social platform to threaten that U.S. forces would remain in the region until a “real agreement” is fully honoured, warning that any non‑compliance would trigger “stronger than anyone has ever seen before” military action. Asian equity markets reacted negatively: Japan’s Nikkei slipped 0.7%, South Korea’s Kospi fell 1.7%, and Hong Kong’s Hang Seng edged down 0.4%. In Europe, the FTSE 100 dipped 0.1%, Germany’s DAX fell 0.6%, France’s CAC 40 dropped 0.3%, and Italy’s FTSE MIB slipped 0.2%. The pan‑European Stoxx 600 trimmed 0.1% after a near‑4% rally the day before, while U.S. futures pointed to a lower opening on Wall Street. Deutsche Bank strategist Jim Reid noted that market stress has eased compared with 24 hours earlier, as the ceasefire news generated renewed optimism and reduced fears of a stagflationary shock. On the diplomatic front, White House press secretary Karoline Leavitt announced that Vice‑President JD Vance will lead a delegation to Islamabad, with initial talks slated for Saturday morning. Jefferies chief European economist Mohit Kumar argued that, despite its fragility, the truce is likely to hold because of the “mutually assured destruction” calculus. He added that both sides now see a ceasefire as the lesser‑evil, given the escalating costs of continued conflict and the strategic challenges of securing cheap drone interceptors and a reliable Hormuz passage.

The world is facing an energy crisis reminiscent of the 1970s, with rising energy prices and fears of stagflation. In response, countries may turn to coal, a dirtiest of fuels, to meet their energy demands.Historically, energy crises have led to increased investment in coal production. During Jimmy Carter's presidency, the US aggressively developed domestic coal sources, which became America's 'black hope'. Similarly, Donald Trump's America is doubling down on fossil fuels, pushing to develop US coal and oil reserves.The energy crisis sparked by the US-Iran war highlights the need for renewable energy sources. However, the conflict has raised hurdles to investing in renewable power generation capacity, including inflation and interest rates. As a result, countries around the world, including Japan, India, and Europe, are considering or have already ramped up their use of coal.Despite the progress made in decarbonization and the switch to cleaner gas in power generation, the current crisis could unravel these efforts. Coal consumption worldwide has increased by about 1.3bn tons since 2020, to 8.8bn tons, driven by demand in India and China. The International Energy Agency (IEA) reports that coal supplied 23% of the world's energy in 2000, increasing to 28% in 2023.The global energy landscape is shifting, with renewable energy sources becoming increasingly important. However, the ongoing conflict in Iran and rising energy prices pose significant challenges to the transition to a low-carbon economy.

Britain is confronting the most severe energy shock since the early 1970s, as exports of oil, gas and fertiliser from the Middle East have abruptly stopped. The government says a response plan exists, but details remain vague. It is unclear whether the UK is better prepared for the fallout from Donald Trump’s war with Iran than it was for the pandemic six years ago. Ministers are sending a "we have your back" message to the public while simultaneously signalling to financial markets that any assistance will be limited and targeted. Contingency planning is especially difficult when dealing with an unpredictable leader like Trump. Britain’s heavy reliance on imported energy and food means that reassurance can only hold for a short time. The economy entered the conflict already on shaky ground: unemployment rose steadily throughout 2025 and growth stalled to a virtual standstill in the final quarter of that year. The sudden loss of Middle‑East energy and fertiliser supplies now adds a colossal supply shock. Last year, Trump’s “liberation day” tariff hikes served as a dry run for a far more serious confrontation. This time, the war is taking place in a region that is both volatile and crucial to the global economy. In the past two weeks, the repercussions have been felt across Asia – the Philippines declared a state of emergency, Sri Lanka introduced a four‑day work week, and South Korea announced budget measures to help households cope with soaring energy bills. The continent is the most dependent on Gulf‑exported energy, making the impact there the sharpest. The International Monetary Fund warned that the shock will drive higher prices and slower growth worldwide. Shortages push fuel and food prices up, eroding disposable income, prompting businesses to cut staff, and increasing the risk of recession. The UK, already projected to be one of the poorest‑performing major economies in 2026, could see its fresh graduate cohort face a brutal job market. Trump’s claim that the war could end within two or three weeks appears desperate. Even a rapid cease‑fire would leave substantial collateral damage, creating a stagflation scenario that could hurt Republican prospects in the upcoming mid‑term elections. British officials hope a swift resolution will limit economic damage, allowing a short‑term inflation spike to subside and the Bank of England to resume interest‑rate cuts. Treasury plans include scrapping the planned autumn fuel‑duty rise and providing targeted help for the poorest households, though the path is unlikely to be that simple. Currently, the Treasury is hesitant to act boldly for fear of unsettling bond markets. History – the 2008 banking collapse and the 2020 pandemic – shows that governments can act decisively without triggering a market backlash, using tools such as aggressive rate cuts, increased borrowing, and quantitative easing. The Bank of England has warned of a "substantial negative supply shock" and is expected to soften markets for future rate cuts, which are inevitable. Finance Minister Rachel Reeves could mitigate labour‑market pain by reversing recent increases in employers’ National Insurance contributions, subsidising public transport, and even lowering speed limits to conserve energy. The war, like the pandemic and Russia’s invasion of Ukraine, underscores the fragility of global supply chains and the need for greater British self‑reliance. Investing heavily in renewable energy is essential, but the UK also imports roughly 40% of its food and has not run a manufacturing trade surplus since 1982. In a world of disrupted supply lines, a robust plan for economic self‑sufficiency is more urgent than ever. Larry Elliott is a Guardian columnist.

The military campaign launched by the United States and Israel against Iran has entered its 24th day, bringing the region to a precarious juncture. As US President Donald Trump’s 48-hour ultimatum for Iran to reopen the Strait of Hormuz approaches its expiration at 23:44 GMT on Monday, Tehran has issued stern warnings regarding the potential targeting of its electricity grid. In response, Iran has vowed to strike the energy and water systems of its Gulf neighbors, raising fears of a broader regional energy crisis.The conflict is already having tangible repercussions on the global economy. Financial markets are reacting sharply to the escalating tensions, with stocks in China and Hong Kong on track for their worst performance in nearly a year. The uncertainty has fueled stagflation fears, prompting UK Prime Minister Keir Starmer to convene an emergency meeting to address the mounting economic fallout.In Iran, the situation remains volatile. The Israeli military has conducted a wide-scale wave of strikes targeting infrastructure across Tehran, resulting in powerful explosions reported in the central, southern, and eastern parts of the capital. Verified footage shows massive columns of fire and smoke rising over Karaj following an air attack. The Iranian Revolutionary Guard Corps (IRGC) has retaliated by threatening attacks on power plants in Israel and those supplying electricity to US bases, while also targeting a turbine engine production site in Qom used for drone components.The conflict has also spilled over into Gulf Cooperation Council (GCC) nations. Saudi Arabia’s Ministry of Defence confirmed that two ballistic missiles were launched toward Riyadh, with one intercepted and the other falling in an uninhabited area. The UAE reported debris injuries in the al-Shawamekh area, while Bahrain confirmed attacks on the US Fifth Fleet. In Qatar, seven people were killed in a helicopter crash, and Kuwait has formally protested airspace violations to the International Civil Aviation Organization.The human toll continues to rise. In Israel, alerts were triggered across Jerusalem and central Israel following explosions, with the casualty toll from attacks on Dimona and Arad climbing to at least 180 injured. In Lebanon, authorities report that at least 1,029 people have been killed since March 2, with over 100 of the victims being children. In Iraq, at least 60 people have been killed, primarily among pro-Iran Popular Mobilisation Forces.